Pileggi bill eliminating 'death tax' on small businesses sent to governor

A bill aimed at eliminating Pennsylvania's inheritance tax, more commonly known as the "death tax," on small businesses has been sent to Gov. Tom Corbett.

The prime sponsor of the Senate Bill 303 is state Senate Majority Leader Dominic Pileggi, R-9, of Chester.

"The number one issue in Pennsylvania right now is jobs, and most jobs are created by small and medium-sized businesses," Pileggi said in prepared statement. "The fastest way to break up a successful small business is to impose a tax when the owner dies and tries to transfer that business to their family. Under current law, the family is often forced to sell the company, or borrow money, just to pay the death tax."

Pileggi introduced the bill earlier this year. He said he introduced the bill because he believed family-owned, small businesses should be exempted from the so-called death tax so that they can pass the business down to the next generation.

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Pileggi's bill was recently included in an amendment to House Bill 465 which contains several amendments to Pennsylvania's tax code, according to Pileggi's spokesman Erik Arneson.

The bill has been sent to Corbett who is expected to sign it into law, according to Arneson.

Under the new law, businesses with 50 or fewer employees and a net book value of assets of less than $5 million will be exempt from the state inheritance tax which is currently 4.5 percent for lineal heirs and 12 percent for siblings. In order to qualify for the exception, a business must continue to be operated as a family business for at least seven years following the transfer.